If you default on your loan, the lenders in most of these states follow a similar process. First, they will send you a Notice of Default and notify you that your home will be sold at auction. The trustee will then proceed to sell the property to the highest bidder. This process favors lenders because it enables them to sell the property while bypassing the time and hassle of going through the courts.
RULES GOVERNING FORECLOSURE TRUSTEES IN NORTH CAROLINA
Under North Carolina law, an attorney cannot serve as a trustee in a foreclosure proceeding if they are also assisting the lender with the foreclosure. This law ended the common practice among lenders of retaining the same attorney to represent their interests in any foreclosure-related disputes and to serve as the ostensibly neutral trustee. A trustee in a North Carolina non- judicial foreclosure thus is more likely to be neutral than a trustee in other states, since they have no pre-existing affiliation with the lender. This law took effect very recently in 2017, so it may serve as a prototype for laws in other states. As of 2018, however, no other state has taken this path. As a result, a homeowner in North Carolina may be able to challenge a foreclosure if the lender is using their own attorney to serve as the foreclosure trustee. There may be loopholes in the law in some cases, however, such as when a large lender owns subsidiary entities. The lender could use a subsidiary company as the trustee while using its own counsel to represent its interests. The state law only covers attorneys rather than business entities. Courts reviewing foreclosure cases often examine whether the lender is complying with the spirit of the law rather than just the letter of the law, though. A foreclosure attorney may be able to craft an argument that this type of arrangement should be disallowed because it results in the same
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